Why the Government Will Default: Welfare Costs

Tea Party promoters say they are in favor of cutting spending. The problem is, they resist cutting spending for Social Security, Medicare, and the Defense Department. Yet these are the three budget-busters.

Keynesian liberal economist Paul Krugman has pointed out the irony of red state welfare checks. More federal money goes to these states than goes to blue states.

There is schizophrenia here. It turns out that over 40% of those people who are on the dole think they aren’t.

Aaron Carroll of Indiana University tells us that in 2010, residents of the 10 states Gallup ranks as “most conservative” received 21.2 percent of their income in government transfers, while the number for the 10 most liberal states was only 17.1 percent.

Now, there’s no mystery about red-state reliance on government programs. These states are relatively poor, which means both that people have fewer sources of income other than safety-net programs and that more of them qualify for “means-tested” programs such as Medicaid.

By the way, the same logic explains why there has been a jump in dependency since 2008. Contrary to what Mr. Santorum and Mr. Romney suggest, Mr. Obama has not radically expanded the safety net. Rather, the dire state of the economy has reduced incomes and made more people eligible for benefits, especially unemployment benefits. Basically, the safety net is the same, but more people are falling into it. . . .

The message I take from all this is that pundits who describe America as a fundamentally conservative country are wrong. Yes, voters sent some severe conservatives to Washington. But those voters would be both shocked and angry if such politicians actually imposed their small-government agenda.

He is correct. This is why no politician with any chance of winning is willing to show what he will cut. This is why the U.S. runs a $1.3 trillion deficit every year, and will continue to do so.

This is why the Great Default is coming, when Washington finally runs out of money to buy votes.

That is when the Federal Reserve will have to inflate. If it does, we will get hyperinflation. If it doesn’t, we will get the Great Default: universal deflationary bankruptcy. The FED wants to find the middle path. But $1.3 trillion deficits must be funded. How? For how long? At what interest rate?

Posting Policy:We have no tolerance for comments containing violence, racism, vulgarity, profanity, all caps, or discourteous behavior. Thank you for partnering with us to maintain a courteous and useful public environment where we can engage in reasonable discourse. Read more.

24 thoughts on “Why the Government Will Default: Welfare Costs”

The problem is not medicare or medicaid. The problem is the lazy loafers munching off the system. Some folks receiving the benefits are just as able to work as I am and a lot younger than most. The younger generation is to lazy and uneducated to perform even the most simple task. They can tell you verbatum who won the oscar's or grammy's. They can tell you which rock band or heavy metal band was voted number 1. What they can not tell you or explan to you is America History, Science, Math. Most that graduate these days can just barely read at a third grade level.

Obama didn't expand the safety net? The growth in the numbers of Americans on welfare since he has been in office has been documented, almost 1/2 of America is under government care. Everything he has done since being coronated has prevented the creation of jobs, at least here, and undermined the economy. He extended unemployment benefits to nearly two years. He prevented the "shovel ready" Keystone pipeline which would not only have generated thousands of direct jobs but would also have provided a safe oil supply where we aren't dependent on the unstable Middle East to fuel our economy. He wants to raise taxes on businesses that are already paying the highest corporate taxes in the world which will continue to stifle job growth and send our jobs overseas. He is importing high technology white collar foreigners to fill jobs when there are qualified unemployed Americans that are right here. He allows illegal immigrants to flood this country and take jobs away as well as draining the medicare system. But king obama isn't to blame?

This is a croc. The budget busters are welfare, medicade, food stamps, extended un-employment insurance, social security given to illegal aliens, and the retirement system for congress, senate, and the presidency. What about that you Ron Paul adherents? Then look at the school system, it is almost worse than welfare, and the kids are being taught how to be good little liberals, and incredibly dumbed down. Out of 161 country's, I think I read we are 87th. Look at the real culprits not the lame stream media rational.

Worked 32 years…..paid medicare and social security monthly when I had a hard time eating…..now, I am on welfare or entitlements because I am 65 and worked hard all my life????? I want a detailed account of what they did with our money. Lance, above, is spot on! Acorn figured out how to flood the system and political correctness gave it to them. Tea Party….baloney! This is why I am totally independent.

Lance you are partially right. The problems are welfare and medical care along with free education to illegals and thanks to certain congress people the illegals can now bring in their parents and grandparents who can receive social security payments even tho they have never paid into it . Don't know for sure but I've heard our congressmen can also collect SS tho have also been able to avoid paying taxes as well as SS. Don't sound right –just heard it. But congress does get full pay retirement as well as medical (family?) after one year service. The president also gets the same benifits and you all should remember that it will be paid for life unless the president is convicted of high treason or removed from office by congress without benefits.
The school system has been on a dead run down hill for years it's only recently become more open as the lazyness increases and Mommy &Daddy get sick and tried of having their hard work going bye bye because their kids aren't smart enough to get a job.
Now if you want more of the same just keep sucking the hind tit of the NWO or CFR. Newt is CFR =fine upstandind member bent on destroying the USA. It's financed and run by the ROCKEFELLER FAMILY . Rom is a stooge puppet like what we have now and the new bozo they have just thrown in is just another pretty boy in the mix to keep it all confused. OPEN YOUR EYES THERE IS A REASON PAUL IS IGNORED PEOPLE THEY ARE AFRAID OF HIM –HE"S CHRISTIAN. There is some of his I don't agree with but he is the only one that is for America and not just for himself or to continue the destruction.

There needs to be cuts? Social Security has become the life blood of many retirees over the years. I worked 40 years, paid into the system, and receive around $599.00 per month. I know people that have gotten on disability and they receive from around $600.00 or more and worked far less years than I. We have people receiving Social Security for disablities that should not be receiving the benefit. The Social Security program expanded to encompass many aspects, including benefits to alien refurgees, illegal aliens, and other areas. Yes, cuts do need to be made in Social Security, It needs to be either pared back to its original intent, or the Paul Ryan plan implemented. By the way, I support many of the issues of the Tea Party.

Once again, one must think carefully and see the root cause and the real problem. This NY Times story claims that the deficit must be funded, etc. which scares people and they agree to be cared for by the nanny state. The real problem, as I see it, is the bloated government is steadily sapping the wealth from the economy and the people. People can't get ahead because of the oppressive taxes and regulations. Crooks and criminals have been allowed to skate by while common people can't support themselves as they have in the past. I will NOT be surprised when things collapse worse than they are now. I will be very sad and very poor, but not surprised.

Of the three 'budget busters' he mentioned, only the Dept. of Defense is a responsibility of the Government and Constitutionally authorized! Social Security and Medicare should NEVER have been implemented in the first place, and should be either privatized or, handed over to the States for management. Three counties in Texas successfully opted out of the Fed. SS system in the early 1980's, and they are currently healthy and paying out benefits of approx. 75% of their former working income. Not only do the folks who paid in get their money back, they earned an average of 6% interest on their investment!

As for the Dept. of Defense, like all other Government agencies there is enormous waste and abuse. There has to be more accountability to be sure the money they are given is not wasted by the bureaucracy.

How about if we just stop providing Soc Sec and Medicare and Medicaid to those who are not even legal citizens, for one thing? Then we need a program to encourage lifetime leeches to get off their butts, such as a 10% cut in benefits each year for adults and identification of “who’s the daddy” to make “daddy” pay for his babies.

(Why is it illegal to swear before God and society that you will love, honor, and support more than one wife – you can go to prison for that – but it’s perfectly legal to run around making babies you don’t even want to hear about, much less support?)

Do you have more info on the three counties in Texas? Check out Chile. Five Americans set up their privatized SS system in 1981. It is apparently working great. Citizens invest in several different funds. Their economy has done extremely well. Check out the CIA website for details.

THE Problem is government spending. Back in dthe mid 1960's Social Security had a Surplus of roughly $68Billion-Dollars. It was the members of congress that began dipping in to the fund and telling We the People that it would be replaced. Well, the end result/s is/are the monies supposedly borrowed by congress for bull-shit spending was NEVERT replaced. Then recently that jerk in the white now cut Social security taxes by half. Sure people in general like the idea of not having to pay so much taxes, but, it took millions from the fund.

Now, that jerk in our white house wants to completely stop Social Security and all its programs including Medicare. Medicade is state assistance. What We the People need is to get obama out of the White House.

Yes, they are Galveston, Matagorda and Brazoria Counties. There is a lot of information about them and how well they are doing, online, especially Galveston for some reason, I guess because it is the biggest. I have not checked in detail about Chile, but I did know a little about it after Herman Cain mentioned it a few times while he was campaigning.

If the money collected by the government for medicare had been invested properly instead of put in a general fund and used on other entitlements, each recipient would be getting more than double what they currently get without it affecting the budget. Social security was paid for by both the worker and the employer. The problem is that the government has made it too easy to get social security disability. Just because people can't do their "original" occupation, doesn't mean they are completely incapable of doing anything but sitting on their butts at home. Before cutting the miniscule benefits that seniors receive, go after the goldbrickers, cut the waste and raise the age of benefits by a couple of years.

Had the federal government not been allowed to borrow from Social Security (it was originally supposed to be untouchable) there would be plenty of money for those who paid into it all their working lives. It was intended for retirees and not illegal aliens, the disabled and a whole lot of others who never paid into the system. And it irks me to say that Medicare is free for seniors. Medicare payments are taken out of Social Security before it reaches your doorstep. And if you don't want to lose the rest of what you worked for all your life then you pay double that amount for the coverage that Medicare doesn't cover. Then there is the 'free' medicine. Yep you are mandated to buy prescription coverage to cover the part medicare doesn't cover. Big penalties if you don't get it btw.

Okay, everybody, calm down, nothing to see here. This is a New York Times article. If something comes out in the NYT I immediately discount it as being from a far left rag. Interesting info from the responses. Keep up the good work.
I love how the left keeps trying to label Social Security as an entitlement. No more so than if you had bought an insurance policy from you local agent, except the folks in D.C. got to use for other stuff they wanted and couldn't get the money to implement. And, you are forced by the government to pay into it. I don't mind that, if they would have left it the hell alone. Too easy for them to resist dipping into it. Now it has become a "ponzi" scheme, according to the lefties. Pay it back, you crooks and swindlers in D.C. Then let's talk about the interest owed for "borrowing" from the fund all these years. Yeah, right, that'll happen.

Because what you paid were taxes. These taxes were immediately spent on recipients of social ……not invested for your future use. Now, we don't have enough taxpayers paying in to social security to provide you with the money you WANT. Sorry, but we were promised something that can't be fulfilled.

Actually it was LBJ who put the SS monies in the general budget to cover up the cost of Vietnam. Congress, as it always does, continued to place these funds in the general budget after the Vietnam conflict was over. As usual, the simplest plan can be escalated by our distinguished congressmen.

I am so unbelievable tired of the politicians calling the social security payment THEY SET UP welfare or an entitlement. YOU TOOK MY MONEY FOR THE LAST 50 YRS AND NOW THAT IT IS TIME TO PAY IT BACK WE FIND OUT YOU SQUANDERED IT SO IT IS INCONVIENT TO HAVE TO PAY. This is the same as the military retirement and military medical care that the politicians promised so that we would spend twenty plus years working for crap pay in lousy conditions supporting and defending this country, but now it is inconvenient for them to have to pay what they promised. Instead of screwing the people who made this country or the ones who defended it cut off the career politicians and the foreign aid to countries who hate and threaten us.

Bill: You are so right. I have a son, who graduated from high school at age twenty one, but could barely read, and had nearly no comprehension of math. I have to say though, on his behalf, about the American History, they were NOT taught history as it had actually happened. I came from Australia originally, and learned history of other countries, as well as our own country, as it happened. Our son, who is now in his late twenties, is currently studying very hard, trying to get his education at home, so that he can get into college to learn the trade he has always wanted to work at, since he was a little boy. Luckily, he has a girl friend who is very academically smart and is helping him learn what he needs to know, not just to get into college, but for actual life situations, financially etc.